Lawmakers Introduce Bill to Delay Implementation of Section 174 Amortization
On January 16, 2024, Senate Finance Chair Ron Wyden (D) and House Ways & Means Chair Jason Smith (R) introduced The Tax Relief for American Families and Workers Act of 2024. This bipartisan tax proposal would reinstate domestic R&D expensing retroactive to 2022 and would remain in effect for tax years beginning before January 1, 2026. Foreign research costs would continue to be amortized over 15 years during this period.
In addition to the reinstatement of Section 174 deductibility, this bill would also extend 100 percent bonus depreciation, increase Section 179 limitations to adjust for inflation, tie the 163(j) limitation to EBITDA, and provide tax breaks for families. Similar to Section 174, these provisions would sunset in 2025. Additionally, this bill would bar any Employee Retention Credit claims after January 31, 2024 in order to combat the continued fraudulent claims associated with this program.
While there has been discussion on how to expedite the package by January 29 to coincide with the beginning of the tax filing season, there is still much that needs to be done before the bill becomes law. McGuire Sponsel will continue to provide updates as they become available.
David Seibel is an engineering principal for the R&D Tax Credit Practice. He combines his knowledge of tax law with his engineering expertise to maximize companies’ research credits and reduce their overall tax burdens.
David ensures clients are receiving studies that meet the highest level of quality. He conducts fieldwork, produces detailed technical calculations, and builds narratives that accurately reflect each company’s research and experimentation activity.